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Market Set-up 10th July

After two days of storm, there was some calm returning yesterday and Nifty closed absolutely flat, just 2 points down. There were times when Nifty went into green and had climbed 11580-11590 levels and on the downside, it has gone on to touch the 100dma of 11470 and took support there. Globally, things are hotting up again with Trump putting up a tweet saying India can no longer put tariffs on American products.

No news on what those products are, or will there be any action. Dow closed flat down by 20 points and everyone is awaiting Fed Chairman Powell’s testimony on rate cut is expected today and everyone is bracing for that. Asian markets are mixed with Hong Kong in the mild positive zone up 50 points and Japan in mild negative 20 points down. Brent crude has started to go up again and is touching distance away from 65 dollars. 

On the domestic front, TCS came up with their Q1 after markets closed and it was mixed with only PAT beating the street estimates. There has been a slowdown across different segments and revenue in dollar terms was a disappointment. Revenue came at 5.48 billion dollars vs 5.65 billion that was expected. Operating margins also dropped 80 bps on YoY and 90 bps QoQ. Health care segment saw maximum growth of 18.1% followed by BFSI which grew at 9.2%, which is a bit of a disappointment.

Another bad news is coming from Airline giant Indigo where there is a major disagreement going on between two promoter families of Bhatia and Gangwal families who co-won the airlines. Next big result will be from Infosys which is expected on Friday. Technically market has taken support at the 100dma and if it is held then we can see Nifty going all the way to the 50dma of 11750 mark. 

On the derivatives front, the selling continued to happen yesterday also in the Futures markets and FIIs sold more than 1400 Cr yesterday and the Nifty futures premium which was 7 points at the beginning of the day moved into a discount of 3 points at the end of the day. The overall long positions also fell below 50% and now the Nifty long positions are at 47% and shorts are 53%. In the options market however there was a mild recovery in put-call ratio and it jumped from 0.88 to 0.91 by the day closed.

However, the trend still remains bearish with two bearish positions taken for every bullish position in options. 11500 put still continues to have the highest open interest on the put side and it added 4.9 lakh positions yesterday. On the call side, 12000 call has 31 lakh positions while 11700 call is close behind with 28.9 lakh positions. 

What is the Nifty call for the day?

Yesterday was more of a stabilizing day and today we don’t have any major bad news that can take Nifty either up or down. Yesterday, I suggested to stay out and today, there could be a possibility of a trade. Today we could have an open between 11530-11560 mark and yesterday’s low of 11460-11470 mark which also coincides with 100dma might act as a support.

On the upside, we have the potential to go to 11580-11600 mark. So, the trade for the day is, if 11460-11480 level holds on the downside then you can take a long position around 11480-11510 levels with 11550-11600 as the target. You can keep a 40-70 point target for your positions today.